Mother And Daughter Indicted In Workers’ Compensation Leasing Company Fraud

On May 30, 2018, a statewide grand jury indicted a mother and daughter for workers’ compensation fraud and grand larceny. Rossy Noriega, also known as Francisca Noriega, 52, of Providence, Rhode Island, was charged with four counts of workers’ compensation fraud and one count of larceny over $250.

Ms. Noriega’s daughter, Sendy Noriega, 30, also of Providence, was indicted by the same statewide grand jury on two counts of workers’ compensation fraud and one count of larceny over $250.

Ms. Noriega and her daughter are to be arraigned in Bristol County Superior Court at a later date.

Rossy Noriega was the president and sole owner of New Diamond Work, Inc., a Massachusetts temporary employment agency located in Fall River.

Between 2009 and 2013, Rossy Noriega paid some of her New Diamond employees via payroll check. However, she also made over $2.5 million in cash withdrawals from New Diamond’s company accounts to pay most of her employees in cash and for her personal use.

An investigation by the state’s Insurance Fraud Bureau’s investigators found that between 2009 and 2014, New Diamond underreported in insurance company audits the number of employees it had and how much those employees were paid to dramatically reduce the insurance premium the company would be charged for workers’ compensation insurance. As a result, New Diamond evaded over $106 thousand in workers’ compensation insurance premiums.

New Diamond filed for voluntary dissolution with the Massachusetts Secretary of State on October 15, 2017.

… engages in deceptive employee leasing practices for the purpose of avoiding full payment of insurance premiums…”

The violation of §14 carries a state prison sentence of up to five years or a jail sentence of “not less than six months nor more than two and one-half years” and a fine of up to ten thousand dollars. Additionally, the same statute provides that

A person found guilty of violating this section [§14(3)] shall, in all cases, upon conviction, in addition to any other punishment, be ordered to make restitution for any financial loss sustained to an aggrieved person as a result of the commission of the crime….

The grand larceny indictments of Rossy Noriega and her daughter also charge felonies that carries a possible state prison sentence for not more than five years, and a fine of not more than twenty-five thousand dollars

Prior conviction for evading $720,923 in income and employment taxes on New Diamond

On April 7, 2016, Rossy Noriega pleaded guilty in federal court in Providence, Rhode Island to charges she failed to pay $720,923 in employment and personal income taxes due to the IRS.

At her plea hearing Ms. Noriega admitted to the court that during tax years 2009-2013, she made over $2.5 million in cash withdrawals from company accounts to pay in cash most of the temporary employees she leased out to various companies.

At her plea hearing, Ms. Noriega admitted she failed to accurately report to the IRS the number of employees, total payments to the employees, and the employees’ and the employers’ share of federal employment taxes due to the IRS. She also admitted that she failed to report her income accurately and pay her income taxes due to the IRS.

The government’s investigation found Ms. Noriega had failed to pay to the IRS $580,066 in payroll taxes on behalf of New Diamond Work, Inc., for the quarters ending March 31, 2009, through and December 31, 2013; and that during tax years 2009-2013, she failed to pay personal income taxes totaling $140,857.

Sentenced to probation and community service

On her guilty pleas to failing to pay employment taxes for employees she paid in cash and failing to pay her income taxes on unreported cash she pocketed from her business, Ms. Noriega received a sentence of two years’ probation with the first six months served in home confinement with electronic monitoring,

The sentencing judge also ordered Ms. Noriega to perform 100 hours of community service and to pay full restitution to the IRS.

The Rhode Island tax indictments although arising out of the same facts as the present Massachusetts workers’ compensation fraud indictments have no preclusive effect since they relate to distinct crimes. Also, the plea agreement in Rhode Island between the U.S. Attorney and Ms. Noriega specifically stated:

“This agreement is limited to the District of Rhode Island and does not bind any other federal, state, or local prosecutive authorities.”

Assistant Attorney General John Reynolds with assistance from Michelle Silva of Attorney General Healey’s Insurance and Unemployment Fraud Unit and investigators at the Insurance Fraud Bureau is prosecuting the Massachusetts workers’ compensation fraud cases against Rossy Noriega and her daughter.

Attorney General Healey’s Insurance and Unemployment Fraud Unit works to protect consumers and the integrity of the insurance system by investigating and prosecuting those who commit fraud against all types of insurers, including the state’s unemployment insurance and workers’ compensation systems.

About Owen Gallagher

Owen Gallagher is an experienced insurance litigator as well as a certified mediator and arbitrator who specializes in insurance industry disputes. His interest and affinity for insurance began at a young age working the counter at his father’s assigned risk agency in Roxbury. Over the course of his career, Owen has argued a number of cases in the Massachusetts Supreme Judicial Court and has helped agents, insurance companies, and lawmakers alike with the complexities and idiosyncrasies of insurance law in the Commonwealth. Owen can be reached here.

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